Ease of doing business should also talk about social enterprises
While the business sector has jumped leaps and bounds , there are still gaps in jobs, talent and services that would allow our nation’s most deprived to be alleviated from poverty. This is where social entrepreneurs, especially India’s youth, can play a role.analysis Updated: Mar 06, 2017 10:25 IST
To improve India’s standing with the World Bank which ranks countries on their Ease of Doing Business (EoDB), the government has appointed the United Nations Development Programme (UNDP) and the National Productivity Council to brief relevant stakeholders about the reform initiatives taken to mend the business climate in the country.
India has a successful business environment, but with this prosperous institutionalisation comes an aversion to trying new things and innovating. While the business sector has moved by leaps and bounds where the whole country chants ‘Digital India’, there are still gaps — gaps in jobs, gaps in talent and gaps in services that lead to our nation’s most deprived still being mired in poverty. This is where social entrepreneurs, especially India’s youth, can play a big role.
A social enterprise is privately owned, it addresses a social problem, in many cases in an innovative way, and operates in a reasonable profit format. Its success is judged in terms of a triple bottom line — fulfilment of social purpose, moderate profit and (environmental) sustainability. It is a disruption of the traditional status quo, which fosters innovation and develops sustainable business ideas to solve pressing societal issues. For social entrepreneurs, it’s not about the balance sheet alone, but it’s not charity either.
The concept has grown enormously in North America and Europe and is gaining momentum in Africa. Several European countries, e.g., UK, France, Italy and Finland have enacted legislation to promote and nurture social enterprises. The UK has designed financial instruments e.g., social impact bonds to provide support to the sector. In India, the Securities Exchange Board of India brought in the Alternative Investment Funds Regulation for supporting social ventures and defined a social venture as ‘a trust, society or company or venture capital undertaking or limited liability partnership formed with the purpose of promoting social welfare or solving social problems or providing social benefits’.
To build a more conducive and inclusive ecosystem for social enterprises to flourish, government backing and support is vital. Social enterprises should, in fact, be natural allies for governments to partner with, as their primary goal is to improve the lives of the marginalised with minimum to no strain on available resources. But social enterprises being a rather nascent sector in the Indian economy, may not have the attention it needs and deserves from the Centre that’s probably unaware of their potential, nor understands how their needs differ from private partnerships or NGOs.
The biggest challenge India is staring at today, is to define and provide a legal framework for ‘social enterprises’. Currently, considering the above method of operation in hybrid model we have organisations existing in both not-for-profit mode and for-profit mode. This form is referred to but not adequately examined. The current crop of social enterprises work in not-for-profit mode and can only access grants but cannot work with the aim to create marginal surplus/ profit since their core is to be non-profit. They are unable to access social venture funds which largely invest in social businesses for impact. Here, the scale and impact is compromised if the not-for-profit proves the model and creates a market.
Shalabh Mittal is CEO, School for Social Entrepreneurs India
The views expressed are personal